How a Post Purchase Valuation Could Impact Your Loan Approval

Valuation Process

If a valuation is deemed necessary, a bank or lender will engage a Certified Practicing Valuer to complete the valuation. A valuer can determine which method they might use to produce a valuation. Including  

• a desktop analysis (if enough data is available) 
• physically inspecting the property, (this may be necessary if extensive renovations have been performed), or 
• doing a curbside drive by of the property 

The valuation assesses the property’s worth based on current market conditions, comparable sales, and its condition.  

If the valuation is lower than expected, it might lead to adjustments in the loan amount, which may result in the purchaser requiring a larger upfront financial contribution, or it may impact the loan terms. 

Lower valuations tend to occur more in the luxury or prestige property market due to the higher cost of properties and sometimes their uniqueness. 

Property types can also impact your ability to get a loan

In a similar vein did you know that some property types attract a closer evaluation before a bank will lend you money? Some types of properties have higher risk profiles or specific characteristics that may affect the property’s value or marketability. 

Property types that could attract under additional review are: 

• Small Apartments/Studios – for example less than 50sqm internal 

• Unusual Titles such as Stratam/Company Titles which may be in place for older apartments, units or townhouses 

• Serviced Apartments 

• Student Accommodation 

• Display Homes 

Sometimes even with a great credit score, a healthy deposit and the ability to service the loan the bank/lender may be reluctant to loan you the money. We recommend having a conversation with your Mortgage Broker or Lender before making any unconditional offers.